Iraqi Kurds defend gas deal with German firm

Arbil, August 31, 2010

Iraq's Kurdish authorities have defended a deal recently signed with Germany's RWE to help them develop the region's gas resources, saying the agreement was legal and constitutional.

Iraq's Oil Ministry issued a statement on Sunday saying that the agreement, like oil deals that the semi-autonomous Kurdish Regional Government has signed with international companies, is illegal because Iraq's oil and gas are federal resources.

"We will continue to successfully develop our oil and gas in line with the constitution, which was accepted by a majority of the Iraqi people," said Falah Mustafa Bakir, head of the foreign relations department in the KRG.

"We will not wait for the instructions of an unsuccessful ministry like the Iraqi ministry of oil. We express our commitment that all income will go to the federal purse and will be distributed to all Iraqi areas without favour."

RWE said on Friday it had signed a gas cooperation agreement with Iraq's Kurdish regional government. Under the deal, RWE would help develop and design domestic and export gas transport infrastructure and create a route to market for Iraqi Kurdistan's gas.

The RWE statement quoted Iraqi Kurdistan's natural resources minister, Ashti Hawrami, as saying that up to 20 billion cubic metres of gas a year could be fed into the Nabucco pipe to bring gas to Turkey and Europe.

The Nabucco project aims to transport up to 31 billion cubic metres of gas a year from the Caspian region to reduce Europe's dependence on Russia, which supplies Western Europe with about a quarter of its natural gas.

Iraq needs to develop its gas sector and open it to foreign investment. But unilateral oil and gas deals negotiated by the Kurdish authorities are opposed by the Arab-led government in Baghdad in a long-running row over energy resources and revenue-sharing.

Baghdad's opposition to oil deals that the Kurds have signed independently with foreign firms has halted oil exports from Kurdish oilfields.

Exporting gas is also controversial in Iraq due to inadequate public electricity supplies 7-1/2 years after the US-led invasion.

The oil ministry has pledged that domestic gas needs will first have to be covered, in particular the future needs of gas turbine powered electricity plants, before any gas is exported. - Reuters